Why Healthcare is So Expensive

The last few weeks have provided two media reports which shed light on why the health care system is broke.  The first is Dr. Atul Gawande’s compassionate and humane piece in The New Yorker on the need to move away from the survival at all costs mentality and focus on easing suffering and quality of life as one’s time on this earth is winding down.

The issue has become pressing, in recent years, for reasons of expense. The soaring cost of health care is the greatest threat to the country’s long-term solvency, and the terminally ill account for a lot of it. Twenty-five per cent of all Medicare spending is for the five per cent of patients who are in their final year of life, and most of that money goes for care in their last couple of months which is of little apparent benefit.

Spending on a disease like cancer tends to follow a particular pattern. There are high initial costs as the cancer is treated, and then, if all goes well, these costs taper off. Medical spending for a breast-cancer survivor, for instance, averaged an estimated fifty-four thousand dollars in 2003, the vast majority of it for the initial diagnostic testing, surgery, and, where necessary, radiation and chemotherapy. For a patient with a fatal version of the disease, though, the cost curve is U-shaped, rising again toward the end—to an average of sixty-three thousand dollars during the last six months of life with an incurable breast cancer. Our medical system is excellent at trying to stave off death with eight-thousand-dollar-a-month chemotherapy, three-thousand-dollar-a-day intensive care, five-thousand-dollar-an-hour surgery. But, ultimately, death comes, and no one is good at knowing when to stop.

The second is a 60 Minutes Report that deals with many of the same topics.  Here we find that 85% of medical care in the US is paid for by insurance companies or the government.  Under such a system, it’s little wonder that people don’t use such services prudently.

Government, through Medicare and Medicade alone, pays for nearly a third of medical expenses.  This doesn’t include the health benefits which public service employees receive.  For all the talk about “socialized medicine,” the current system, even before Obama care kicks in, is a sick joke.  Imagine that half the population got to eat whatever they wanted for free.  Of course this privileged class would save tons of money and become very fat while everybody left to buy their food on the market would be shocked at how expensive bread, beverages and fruit had become.  Whether a total socialization of the system would be better or worse is hard to say, though what is certain is the current high costs are a government, rather than a market, failure.